Aoyama Sogo Accounting Firm

Innovation Speed Quality

Vol.04C h a i r m a n ’s

9/ 30/ 2021

C o l u m nApproach to green-energy projects
Fortunately, we, Aoyama Sogo Accounting Firm, are receiving inquiries about possible project set-ups from many clients despite
the Covid -19 calamity. Based on our policy, in which all the data other than those related to personnel should be disclosed toemployees as much as possible, the number of newly received projects and the outline of the projects are announced in a morning
assembly, so that groups other than the principals involved in a project can support them.
As of the end of August, 2021, as expected, we received mostly green-energy related projects, particularly mega-solar projects.
Projects received using the Feed-in Tariffs (FIT) scheme introduced in 2012 include quite a lot of secondary market transactions.
It is said that green energy investments will shift from those based on the FIT scheme, tobe completed during its applicable period of 20 years, to those with a view toward theFeed-in Premium (FIP) scheme to be implemented in 2022. Different from the FIT, the FIP
is a system in which subsidies linked to the market price are provided.
We have been engaged in many green energy projects and, as a result, have developed
more staff with rich experience. Please feel free to contact us. We quickly gather relevant
information also on the FIP and are happy to receive inquiries.
（Kazuhiro Matsuzawa, Representative Director and Chairman)

Renewable Energy Information■Projects for studying measures geothermal power utilization
harmonizing with regions, , etc. - Requested amount: 300 million yen

Rough estimate of FY2022 budget request announced
by the Ministry of the Environment■Projects for promoting sustainable finance -- Requested amount:
300 million yen

The Ministry of the Environment announced a rough estimate of the fiscal
year 2022 budget request in August 2021. The ministry intends tointensively work to achieve an ambitious 2030 target with implementationof various measures such as a reduction of greenhouse gas emissions by
46% in response to the need of the times, an expansion of the market forcircular economy-related businesses to more than 80 trillion yen, securing
30% of land and sea as protected areas (“30 by 30”), and an increase of theexport value of decarbonization infrastructure to one trillion yen. Here inthis note, I will introduce the matters which seem to be particularly related
to renewable energy and look into the contents of some of them.

■Projects for promoting regional decarbonization businesses using
floating offshore wind power generation -- Request amount: 350
million yen
Study information required to support the early prevalence of floating
offshore wind power generation, various surveys necessary for theregions aiming for local production for local consumption of energy by
floating offshore wind power generation, and prospects for regional
business feasibility and carbon dioxide reduction effects before
carrying out the following in order to promote decarbonization
businesses.
①Surveys and studies to realize the early spread of floating offshore
wind power generation②Verification of business feasibility in regions aiming for local
production for local consumption of energy, etc.

■Subsidies for regions shifting to decarbonization and promoting
renewable energy -- Request amount: 20 billion yen
Comprehensively support, over multiple years, regional public bodies, etc.,
actively working on decarbonization①Support regions leading decarbonization②Support regions working on priority measures■Projects for converting renewable energy to a main source of power andresilience enhancement in regions utilizing Power Purchase Agreements(PPAs), etc. -- Requested amount: 16.45 billion yen■Demonstration projects for optimization of environmental conservation
methods to promote the introduction of offshore wind power generation -Requested amount: 460 million yen
Since it is necessary to promote rationalization and optimization ofenvironmental impact assessments conducted based on the Environmental
Impact Assessment Act in order to introduce a large amount of offshore
wind power toward the realization of a carbon-free society, the followings
will be carried out.
①Survey of offshore environment information and provision of it②Demonstration projects for adaptive management of offshore wind
power generation■Projects for further utilization of hydrogen derived from renewableenergy, etc., to build a carbon-free society -- Requested amount: 7.7
billion yen■Projects for developing regional decarbonization business models
using tidal power generation -- Requested amount: 650 million yen
Tidal power generation enables stable power supply throughout theyear since it uses tidal force. Since, in Japan, there are appropriate
tidal areas for tidal power generation in coastal waters such straits
and the Seto inland sea, the creation of business models forcommercialization of tidal power generation systems will be targeted
after realizing the reduction of power generation costs throughimproving the efficiency of tidal power generators, developing remoteisland business models in which tidal energy is combined with othertypes of renewable energy, and studying the economics of establishinga ”tidal firm” with multiple number of tidal current generators
installed. (Hirokazu Ando, Executive Manager )Copyright(c)2021 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

Innovation Speed Quality

Vol.04

9/ 30/ 2021

R e a l E s t a t e M a r k e t
I n f o r m a t i o n

Post-Olympic market
I interviewed the following persons engaging the real estate market.
Mr. T: Representative of an independent real estate advisory company
Mr. K: Investment manager of a Japanese real estate company――Before the Corona-virus pandemic, there was concern about theso-called "2020 problem," in which real estate prices would fall after apeak to mark when the Olympic and Paralympic Games Tokyo 2020
would be held.
Mr. T: The Olympic and Paralympic Games were greatly influenced by the pandemic, and I cannot deny that thegames were over before I realized it. As long as global excess liquidity continues to exist, money is still likely toflow into Japan as well as other destinations, and real estate prices are expected to stay in a high range for theforeseeable future unless interest rates rise. Especially logistic facilities and residential buildings are likely to
attract funds.
Meanwhile, in some of the districts in Tokyo, newly built residential buildings bought by funds are not easy tolease out due to lower demand. This kind of development may give an impact on portfolio.
――Some demand has disappeared due to a paradigm shift, but, on the other hand, a gradual market recovery isexpected on the back of accumulated demand toward the containment of the pandemic.
Mr. K: The current situation is different depending on whether properties are bought and sold or rented.
Since Japanese markets are stable, fund inflow from overseas players such as European pension funds is continuing,
and cap rates for office buildings, rental housing and logistic facilities are falling, affected by lower interest rates
among other factors. Some major companies sold their own buildings, but, by contrast, owners of small andmedium-size building are able to raise funds despite the pandemic, giving an impression of their having strong
buying needs.
The rental market receives numerous inquiries for logistics facilities while some residential buildings areexperiencing a hard time depending on area. It is difficult to anticipate a rise in rental feels since wage have not risen,
but I want to expect something good from the recent move toward rising compensation for employees in order tosecure high quality personnel.
Office buildings have started to show an improving trend
in terms of vacancy rates and rental fees in some areas,
but I think that a move to reduce space will continue forsome time. With the expected move in the fixed-rent
property market and continuous supply until around2025, it is difficult to predict at which point the market
will start a full-fledged recovery, isn’t it?
（ Shigeru Hirai, Client Relations Group)

Copyright(c)2021 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

Innovation Speed Quality

Vol.04

9/ 30/ 2021

Global Real Estate News
RE100: Push for GreenA look at the EPA (U.S. Environmental
Protection Agency) green powerpartnership list reveals that the biggest
Fortune 500 companies are RE100(100% renewable energy). Among theminclude Microsoft, Apple, Goldman
Sachs, and Citi Bank. As part of acompany’s sustainability strategy,
claims of using electricity generated
from renewable sources like solar andwind are more desirable than ever.

As much publicized, investor-led divestments of U.S. gas andoil companies and shift to investments in alternative energy
companies is adding to the push for more renewable energy.
Of course, funding green energy projects, whether directlyor through RECs, and shifting to RE100 is just one piece ofthe puzzle to sustainability.

https://www.epa.gov/greenpow
er/green-power-partnershipnational-top-100

In many cases, since companies can’t procure all of their clean
energy onsite for their offices and factories, many use powerpurchase agreements (PPA) or virtual PPAs to obtain renewableenergy credits (REC). The basic idea is that the source ofelectricity becomes indistinguishable once it enters the power
grid, so the RECs becomes proof of their renewable energy
consumption.

Real life ramifications of climate change are affectingbusinesses, with record floods and fires disrupting supply
chains and affecting an entire region’s infrastructure. And
investors are demanding more transparency andcomparability in reports regarding climate change risk.
Although very preliminary, in a recent statement by the SEC,
requirements for more qualitative and quantitative
disclosures look to be on the horizon.
（ Yuichi Totani, Client Relations Group)

Tax-related Topic for This Monthaffiliates amounted to over 993.4 billion yen in three years
from 2017 to 2019.

FY 2022 tax reform
Following the full submission of requests for the next fiscal year’s
tax reform by ministries and agencies at the end of the August,the Ministry of Finance (MOF) has publicized a list of the requests
on its website. The same requests as submitted every year suchas Expansion of Profit/loss Offset Scope for Financial Instruments
and the improvement of the life insurance premium deduction
system stand out in the list, but “Review of withholding tax on
dividends paid by wholly-owned subsidiaries” is one of therequests never made before.
Withholding on dividends, etc., has the nature of prepayment ofcorporate tax of a legal entity that receives dividends, and thisprepayment is, as a general rule, offset through the tax filingprocess of the legal entity. On the other hand, corporate tax is
not levied in principle on stock dividends paid by wholly-owned
subsidiaries, or affiliates of which more than one third of total
number of shares issued are held, due to the application of theExclusion from Gross Profits of Dividends Received, etc. The
fiscal year 2019 audit report prepared by the Board of Audit ofJapan confirmed that the amount of income tax deduction for
dividends received by a total 1,667 legal entities holding shares ofwholly-owned subsidiaries or

If the request for the revision of withholding on dividends is
accepted and the reform is made, the unreasonablemechanism in which the advance payment of un-levied
corporate tax is required will be improved, and the one-time
financial burden of corporate groups will be diminished as aresult.
The requests submitted to the MOF are discussed by the Tax
Research Committee of the ruling parties from around
November every year, and the Tax Reform Proposals isreleased as a final revisionary plan around mid-December.
However, sufficient time to fully discuss the requests may not
be secured this year due to factors such as the lower houseelection.
Will the FY 2022 tax reform
end up the postponement of
the conclusion standing out?
(Yasuhiro Ando,Tax Consulting Group)

Copyright(c)2021 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.